Chinese firm in Unocal takeover bid

Chinese state-run oil firm CNOOC Ltd has offered to buy US producer Unocal for $18.5 billion in cash, setting the stage for a takeover battle with Chevron Corp.

23 Jun 2005 03:55 GMT

US oil giant Unocal is sought after for its prized Asian assets

If CNOOC acquires Unocal, it would be the biggest-ever overseas acquisition by a Chinese firm, reflecting China's broader energy strategy of buying overseas oil and gas reserves to feed its fast-growing economy for years into the future.

CNOOC Chairman Fu Chengyu told Reuters in an interview on Thursday that he confident of winning any takeover battle.

Fu said CNOOC's bid was "clearly superior" to Chevron's cash and stock offer to buy Unocal for roughly $16.4 billion.

"We are quite confident. We believe the US government will approve the deal."

Counter-offer

CNOOC's counter-offer - widely awaited by investors after it hinted at it earlier this month - was made after its board of directors met for several hours in Beijing on Wednesday night.

Unocal, sought after for its prized portfolio of Asian assets, responded by saying it would evaluate CNOOC's offer, but that its board continued to recommend a deal with its larger California rival Chevron.

The Chinese company could facepolitical hurdles in buying Unocal

Chevron continued to stand behind its April offer and said its deal was highly likely to close since it is nearing completion of the regulatory process to allow for a vote by Unocal shareholders in early August.

The companies had initially expected to close the deal by the end of the year, a Unocal spokesman said.

For Chevron, Unocal represents an opportunity to boost its profile closer to industry leaders Exxon and BP, as well as replenish reserves that are getting harder and harder to find.

Despite the bold move to challenge Chevron on its home turf, CNOOC stressed that its bid of $67 for each Unocal share was friendly and that it is seeking a consensual deal with Unocal.

The Chinese company - which analysts have warned could face political hurdles in buying a US company - also promised the deal would not hurt the US oil and gas market, since Unocal's US oil and gas output would continue to be sold here.